The Russian online retail sector, which experienced a growth of 2.7% in 2022, reaching a value of $32.3 billion, is on a trajectory to expand by 32.3% to $42.7 billion by 2027. This sector, accounting for 8% of the European online retail market value, is driven by the digital connectivity of the population and a preference for the convenience of online shopping.

Electrical and electronics retail emerged as the dominant segment, contributing 41.1% to the sector’s total value, reflecting the modern consumer’s inclination towards cutting-edge technology and smart products. Despite the robust growth in recent years, the sector faces strong competition due to the large number of players, including domestic giants Wildberries, M.Video, and Ozon.ru, and the exit of major Western brands. This competitive environment is characterized by product differentiation, low brand loyalty, and the ease with which customers can switch between providers.

In 2022, the Russian sports equipment retail market witnessed a significant downturn, contracting by 9.4% to a market value of $4,255.4 million. This decline is attributed to a combination of sanctions resulting from the Russia-Ukraine crisis and the departure of major international brands from the Russian market. Looking ahead, the market is forecasted to further decrease by 3.7%, settling at a value of $4,097.4 million by 2027.

Russia, holding an 8.5% share of the European sports equipment retail market, has historically been a dynamic market with a range of competitors, including general merchandisers, specialist retailers, and manufacturers engaging in direct sales. Key players such as Sportmaster and Decathlon lead the market, despite a highly fragmented landscape that includes department stores, other sports brands, and e-commerce platforms like Wildberries, fostering a highly competitive environment.

Fix Price, one of the leading variety value retailers globally and the largest in Russia, revealed its Q4 and FY 2023 results on February 28, 2024, highlighting a network growth with 252 net new stores and a 13.5% year-on-year growth in total selling space to 1,390.6 thousand sqm. LFL sales saw a slight decline of 0.9% due to softer consumer demand. The quarter witnessed a shift in the assortment mix, with non-food items accounting for 50.2% of retail sales. The company also tested a new price point of RUB 399, and the total number of registered loyalty cardholders reached 25.7 million, with transactions using loyalty cards representing 60.9% of total retail sales.

The Russian gift card industry is projected to witness substantial growth, reaching a market volume of $7.6 billion in 2023, as per the latest market intelligence report. This growth trajectory reflects a compound annual growth rate (CAGR) of 8.3% from 2018 to 2022.

Key factors driving this growth include advancements in e-commerce, increased adoption of remote employee incentives, a surge in digital gifting, and strategic initiatives by various sectors including government, hospitality, and travel.

The forecast indicates sustained growth up to 2027, with expectations for the market to maintain a CAGR of 7.8%, reaching a valuation of $10.2 billion.

The digital pivot within retail and corporate sectors, along with consumer preference for the convenience and flexibility of gift cards, contributes significantly to this growth.

By Alexey Tarasov

The Russian jewelry market is experiencing new economic realities that are impacting its players differently depending on the scale of their businesses.

On one hand, the suspension of international brands' activities in Russia has freed up a portion of the market, seemingly allowing for growth and the occupation of niche spaces. On the other hand, the government introduced a new unified tax system in 2022, applicable to players of any scale, imposing a 20% tax rate compared to the previous 6% tax on income or 15% tax on the difference between income and expenses paid by individual entrepreneurs.

According to a report by the Association of Internet Commerce Companies (AKIT), the turnover of e-commerce in Russia saw a significant increase of almost 30% in 2022 compared to the previous year, reaching a total of 4.98 trillion rubles. The AKIT predicts that such growth rates may continue in 2023, provided that there are no critical changes in market conditions, such as currency fluctuations. The association believes that 25-30% has become an annual sustainable growth rate in Russian e-commerce.

The report also indicates that the share of e-commerce in total retail sales has increased by 2.4 percentage points over the year, making up 11.6%. It is noteworthy that the share of online sales in non-food retail is significantly higher than in food retail, amounting to 19.9% and 3.1%, respectively. Furthermore, the share of cross-border trade has decreased by 9.4 percentage points to 3.6% over the year.

The Russian market for jewelry and watches saw modest growth in the past few years, with a significant decline in revenues in 2020. However, the market recovered in 2021 with strong double-digit growth, and healthy growth is expected in the remaining forecast period of 2021-2026, with particularly strong growth in 2023 and 2024.

The jewelry and watches retail market is largely based on discretionary consumer spending and is very sensitive to changes in consumers’ disposable income and confidence. The market saw strong growth in 2021 due to economic recovery, the opening of physical stores, and the removal of export restrictions.

The Russian jewelry and watches market grew in value by 27% in 2021 compared to 2020, while the volume grew by only 4%. The increase in prices in jewelry retail in 2021 by 22% compared to the previous year and by 45% against 2019 led to an increase in sales of silver jewelry but prevented a full recovery in the market.

The Moscow-based online retailer Ozon and streaming service ivi are both reportedly considering initial public offerings in the U.S. later this year. Russia’s leading bank, Sberbank, was in talks to buy a large minority stake in Ozone. But now that talks have stalled, Ozon’s plan has shifted toward an IPO.

With over 80 million people using the internet monthly, Russia has the largest online audience in Europe, and long-term growth prospects are promising.